S&P 500 Logs Best Start to Year Since 1991

Stocks closed in the red Wednesday as Bernanke dashed hopes for further monetary stimulus during his speech to Congress on the economy.

Still, the S&P has surged 8.7 percent since January, logging its best start to the year since 1991. Meanwhile, the Nasdaq briefly topped 3,000 in intraday trading for the first time since December 2000.

The S&P 500 snapped a four-day winning streak, declining 6.50 points, or 0.47 percent, to finish at 1,365.68. The Nasdaq slipped 19.87 points, or 0.67 percent to end at 2,966.89, momentarily crossed 3,000 earlier in the session for the first time in more than 12 years.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, closed above 18.

Bernanke said the job market is still "far from normal" in his semi-annual monetary policy report to Congress and added that rising gasoline prices will likely push up inflation temporarily, while reducing consumers' purchasing power.

“People have had an excuse to buy for the last three months and that excuse has been free money…people were looking for more from Bernanke," said Joe Saluzzi, co-manager of trading at Themis Trading. “People want the punch bowl to be there forever."

Traders said market participants reading between the lines of Bernanke's testimony were disappointed that the Fed Chairman did not give further hints of monetary stimulus for the economy.

The Fed chairman's comments pushed the U.S. greenback higheragainst a basket of major currencies, while gold and silver tumbled sharply.

Stocks gained at the open after news GDP grew at a 3 percent annual rate, logging the fastest gain since the second quarter of 2010, according to the Commerce Department. The economy expanded at a 1.8 percent pace in the third quarter.

And the index of Midwest business activity gained in February to 64.0, hitting its highest level since last April, according to the Chicago ISM.

The strong economic data from this morning is “another reason why you’d expect Bernanke to take the foot off the [QE3] pedal,” said Themis Trading's Saluzzi.

Meanwhile, traders seemed to shrug off the Fed's latest Beige Book report that said the economy expanded moderatelyin January through mid-February as hiring picked up across several districts.

European shares gained as the ECB’s mass loanissuance released extra liquidity into the financial sector. Banks absorbed almost 530 euros of the ECB's second offering of low-cost three-year loans, topping expectations.

Meanwhile, Goldman Sachs and Wells Fargo may face federal enforcement actionrelated to mortgage-backed securities deals leading into the financial crisis, according to regulatory filings by the banks.

Among earnings, Costco edged higher after the warehouse club operator topped earnings that topped expectations, thanks to its its lower-priced gasoline that drew more customers to stores.

First Solar plunged to lead the S&P 500 laggards after the firm posted a loss and cut its forecast for 2012 sales.

Toll Brothers rallied after the luxury homebuilder's CEO Douglas Yearly said he sees "improvement everywhere," adding that his company feels "the best" they have in five years. Rivals Pulte Homes , DR Horton and Lennar also jumped.

Weekly mortgage applications rose last weekas interest rates dipped, although demand for refinancing declined, according to the Mortgage Bankers Association.